What type of incentive is represented by award fees and shared savings for early completion?

Award fees and shared savings for early completion are considered explicit incentives because they are clearly defined and communicated rewards that are tied to specific performance outcomes. In contract arrangements, explicit incentives are designed to motivate the contractor to achieve or exceed predetermined performance benchmarks, such as completing a project ahead of schedule.

These incentives are structured as part of the contractual agreement, making them tangible rewards that both parties can track and measure. For example, if a contractor completes a project ahead of schedule, they may receive a bonus or a percentage of the savings as an explicit reward for their efficiency. This clarity in the incentive structure fosters alignment between the project team's goals and the owner's objectives, encouraging high performance and timely project delivery.

Implicit incentives, on the other hand, might involve less formal arrangements or positive reinforcement that isn’t clearly outlined in the contract, making them less effective as a motivational tool. In contrast, contingency fees and success fees are typically more associated with different compensation structures rather than the specific incentive type described in the question.